For the topic of my first writing, I have thought it appropriate to focus on trading during the Christmas holiday. A tumultuous time fraught with the collision of ideas from those who are looking for the "Christmas Rally" as a way to top off their gains by the end of the year and those betting heavily against the market hoping to keep the rally from actually happening. Of course, the normal retail investor hoping to grow his or her retirement fund sees the volatility and can be tempted to "sell, sell, sell" and take the "tax loss" on this years return. However, for those with a bit of discipline, staying in the market or even averaging down can bring a load of returns in the year to come. Case in point: RIMM.
Research In Motion started out the year in the mid-60s. Currently at $130.00 (2006.12.23), anyone who was holding this stock since that point would be more than happy to get out as the stock powered through par on its way to doubling. It's pulled upside surprises in the earnings category all year and continues to do so. The company has almost no debt and approximatly 8 times assets to liabilities and it has a positive cash flow. Growth is good and looking at its PEG ratio, the stock is cheap. So why was it down almost 3% Friday? A light trading volume lets the funds play with the stock price and do what they want with it. In the short term, this will fly. However, once the new year comes in and the market has a possible adjustment, people are going to see this stock for the gem it is.
As the year end comes to a close though, emotions are running high. Funds are looking to eek out every last cent so they can beat the S&P and keep all their clients money to run again next year. There are many determined to move the market to their whim and RIMM is just one example. In the end though, this stock will shine and move to ever higher reaches in the new year.
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